Share Premium Account

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DEFINITION of 'Share Premium Account'

Usually found on the balance sheet, this is the account to which the amount of money paid (or promised to be paid) by a shareholder for a share is credited to, only if the shareholder paid more than the cost of the share.

INVESTOPEDIA EXPLAINS 'Share Premium Account'

The share premium account may be used to issue bonus shares, write-off equity related expenses like underwriting costs, etc.

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RELATED FAQS
  1. What are the IRS regulations regarding a share premium account?

    A company's share premium account – also known as the capital surplus or additional paid-in capital – is more regulated by ... Read Full Answer >>
  2. How can an investor determine a company's annual return from looking at its financial ...

    The funds in a share premium account cannot be used for a company's general expenses. These funds are restricted in terms ... Read Full Answer >>
  3. What sectors are best for an investor seeking a high annual return?

    A company receives a share premium whenever it receives money in excess of the face value (par value) of its shares. Corporations ... Read Full Answer >>
  4. How does a share premium account appear on a balance sheet?

    A share premium account shows up in the shareholders’ equity portion of the balance sheet. The share premium account represents ... Read Full Answer >>
  5. How often should a small business owner go through a bank reconciliation process?

    Small business owners should go through the bank reconciliation process at least monthly, and many business consultants recommend ... Read Full Answer >>
  6. What is the difference between recurring and non-recurring general and administrative ...

    The difference between recurring and nonrecurring general and administrative expenses can best be understood as the difference ... Read Full Answer >>
Related Articles
  1. Economics

    What is a Share Premium Account?

    The share premium account is an equity account found on a company’s balance sheet.
  2. Fundamental Analysis

    Understanding Consolidated Financial Statements

    Consolidated financial statements are the combined financial statements of a parent company and its subsidiaries.
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    Explaining the Common Size Income Statement

    A common size income statement expresses each account as a percentage of net sales.
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    Understanding Historical Cost

    Historical cost equals the original purchase price of an asset recorded on a company’s balance sheet.
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    A cash book is an accounting book that records all cash receipts and cash payments before they’re recorded in a business’s general ledger.
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    Capital reserve is an account on a company’s or municipality’s balance sheet that is dedicated to money reserved for long-term or large-scale projects.
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    Capital investment is a term that describes a company’s expenditures for long-term assets used in the operation of its business.
  8. Economics

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    In vertical analysis, each line item on a company’s financial statements is presented as a percentage of a larger number.
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    Accounting profit is the net earnings of a business as calculated under Generally Accepted Accounting Principles (GAAP).

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